Informal caregiving and work: A high price to pay. The case of Baltic States

Abstract

• Informal care obligations deter both extensive and intensive margins of work. • Being a main carer in the household enhances labour market implications. • Caregiving induces excessive utilization of unemployment benefits among males. • Nonemployed males and females respond to care obligations heterogeneously. The impact of informal care burden on the labour market outcomes has been the subject of a number of studies. The literature so far has, however, mostly neglected the post-transition countries. The purpose of this study is to provide empirical evidence on various labour market implications of informal care in the three Baltic States – Estonia, Latvia and Lithuania. In particular, we examine the extensive and intensive margins of work, wage effects, job seeking behaviour and utilization of unemployment benefits. We apply instrumental variable approach to address the observed endogeneity of informal care. The obtained results support the existence of a significant deterrent effect of caregiving on both extensive and intensive margins of work among males and females in all the three countries. Wage penalties are found to be stronger in Estonia and Latvia, where reliance on familial care is particularly high. The evidence also suggests that the existing systems induce excessive utilization of unemployment benefits among males in the three Baltic States. The results provided in this study are germane to the development of national labour market and long-term care policies.